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Tuesday, 16 July 13
TAKE - OR - PAY CONTRACTS CONTINUE TO INCENTIVISE AUSTRALIAN COAL PRODUCERS DESPITE POTENTIAL NEGATIVE CASH MARGINS - WOOD MACKENZIE
 Australia's coal production has continued to grow, despite lower coal prices in 2013. Global investors and suppliers are therefore questioning whether more production will be shut down. Wood Mackenzie estimates that in 2013, only 4 million tonnes (mt) of coal production in Australia is at risk of closure even though 32mt of coal will be produced at negative margins, including sustaining capital. The decision to continue production instead of shutting it down can mainly be attributed to transport and port contracts in Australia, otherwise known as 'take-or-pay' contracts.
Take-or-pay contracts are fixed cost contracts that result in most producers paying for capacity regardless of tonnes shipped. Stronger growth in exports relative to new capacity build will reduce the average cost per tonne that miners pay for not fully utilising contracted capacity.
Mr. Viktor Tanevski, Coal Cost Analyst at Wood Mackenzie, says, "There have only been two mine closures so far in 2013 compared to seven in 2012. Despite the low coal price environment and current margin squeeze, take-or-pay contracts are incentivising coal producers to increase rather than reduce production, even if additional production is generating negative cash margins. This is because the fixed cost of infrastructure capacity makes the cost of shutting down even more expensive than the cost of maintaining production."
"We estimate that only 4mt, or just over 1% of Australia's coal exports in 2013, is at risk of closure based on Hard Coking Coal (HCC) price of US$171/t and thermal coal price of US$92/t. This is not a significant volume of output; however the amount at risk increases significantly under a lower price scenario.
Wood Mackenzie analyses that if average prices fall to US$122/t for HCC and US$77/t for thermal coal in 2013, then 45mt or 13% of Australia's coal exports in 2013 will be at risk of closure. At that price, a total of 204mt of production will be suffering negative margins.
In summary, Mr. Tanevski says, "Our expectation is that there will not be a significant dent in Australia's production this year. However, if prices do fall below expectations, the risk of closure for mines producing at negative margins will increase, reducing output."
Editor's notes:
Wood Mackenzie is the most comprehensive source of knowledge about the world's energy and metals industries. We analyse and advise on every stage along the value chain - from discovery to delivery, and beyond - to provide clients with the commercial insight that makes them stronger. For more information visit Wood Mackenzie.
Views expressed herein are personal views of the author and not that of COALspot.com and subject to COALspot.com's disclaimer clause. We welcome article submissions from experts in the areas of coal, mining, shipping, etc. To submit your articles please click here.
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Tuesday, 11 June 13
COAL: NO SIGN OF RECOVERY - GABRIELLA
COALspot.com: We attended the 19th Annual Coaltrans Asia Conference, where we found most of the speakers were not very optimistic on the outlook for ...
Tuesday, 11 June 13
NEWCASTLE PORT SHIPPED MORE COAL WEEK ENDED 11 JUNE 2013
COALspot.com - Newcastle port in Australia has loaded 3,104,509 tons of coal for the week ended 0700 hours 11 June 2013, Newcastle Port Corp. ...
Tuesday, 11 June 13
OUTLOOK FOR CAPESIZES LOOKS GRIM, DESPITE FALLING IRON ORE PRICES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Things aren't looking all that rosy for the dry bulk market, despite a stronger volume of iron ore imports during the months of March and April, as ...
Sunday, 09 June 13
CFR SOUTH CHINA COAL SWAP IS UNDER PRESSURE
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average July 2013 delivery have lost 0.03 percent week on week but gained 0.07 pe ...
Sunday, 09 June 13
IRON ORE DEMAND: WEAK; COAL MOVEMENT: STEADY TO INDIA AND CHINA - CAPT. REDDY
COALspot.com - The freight market was fairly steady with BDI up by 0.37 per cent closed at 812 points this week.
The Cape index was also ended in ...
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- Madhucon Powers Ltd - India
- Maheswari Brothers Coal Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Coal Association
- Bharathi Cement Corporation - India
- Uttam Galva Steels Limited - India
- Carbofer General Trading SA - India
- SMG Consultants - Indonesia
- Baramulti Group, Indonesia
- Lanco Infratech Ltd - India
- Standard Chartered Bank - UAE
- McConnell Dowell - Australia
- Siam City Cement - Thailand
- Indonesian Coal Mining Association
- CIMB Investment Bank - Malaysia
- Binh Thuan Hamico - Vietnam
- Kepco SPC Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Aditya Birla Group - India
- Anglo American - United Kingdom
- Barasentosa Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- VISA Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Africa Commodities Group - South Africa
- Central Electricity Authority - India
- Salva Resources Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chamber of Mines of South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
- LBH Netherlands Bv - Netherlands
- The University of Queensland
- Essar Steel Hazira Ltd - India
- Singapore Mercantile Exchange
- GN Power Mariveles Coal Plant, Philippines
- Central Java Power - Indonesia
- Eastern Energy - Thailand
- Bangladesh Power Developement Board
- Malabar Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- GVK Power & Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Ind-Barath Power Infra Limited - India
- Timah Investasi Mineral - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Sojitz Corporation - Japan
- Miang Besar Coal Terminal - Indonesia
- Cement Manufacturers Association - India
- India Bulls Power Limited - India
- Therma Luzon, Inc, Philippines
- Planning Commission, India
- Kapuas Tunggal Persada - Indonesia
- Coalindo Energy - Indonesia
- PowerSource Philippines DevCo
- Kideco Jaya Agung - Indonesia
- Siam City Cement PLC, Thailand
- Ministry of Mines - Canada
- Altura Mining Limited, Indonesia
- Bayan Resources Tbk. - Indonesia
- Chettinad Cement Corporation Ltd - India
- Oldendorff Carriers - Singapore
- Simpson Spence & Young - Indonesia
- The Treasury - Australian Government
- Ambuja Cements Ltd - India
- Power Finance Corporation Ltd., India
- Ceylon Electricity Board - Sri Lanka
- Deloitte Consulting - India
- Agrawal Coal Company - India
- Aboitiz Power Corporation - Philippines
- Mercator Lines Limited - India
- Riau Bara Harum - Indonesia
- Edison Trading Spa - Italy
- PNOC Exploration Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Orica Mining Services - Indonesia
- Savvy Resources Ltd - HongKong
- Marubeni Corporation - India
- Leighton Contractors Pty Ltd - Australia
- Billiton Holdings Pty Ltd - Australia
- Australian Commodity Traders Exchange
- Indo Tambangraya Megah - Indonesia
- Jindal Steel & Power Ltd - India
- Goldman Sachs - Singapore
- Makarim & Taira - Indonesia
- Grasim Industreis Ltd - India
- Sakthi Sugars Limited - India
- Wilmar Investment Holdings
- Larsen & Toubro Limited - India
- Kobexindo Tractors - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- MS Steel International - UAE
- Directorate General of MIneral and Coal - Indonesia
- Romanian Commodities Exchange
- Meralco Power Generation, Philippines
- White Energy Company Limited
- Sical Logistics Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Rio Tinto Coal - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tamil Nadu electricity Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Heidelberg Cement - Germany
- PetroVietnam Power Coal Import and Supply Company
- Mjunction Services Limited - India
- Mercuria Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Tata Chemicals Ltd - India
- OPG Power Generation Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- Global Business Power Corporation, Philippines
- London Commodity Brokers - England
- Krishnapatnam Port Company Ltd. - India
- Merrill Lynch Commodities Europe
- Bhatia International Limited - India
- PTC India Limited - India
- SN Aboitiz Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Indian Energy Exchange, India
- Pipit Mutiara Jaya. PT, Indonesia
- Latin American Coal - Colombia
- Dalmia Cement Bharat India
- Kartika Selabumi Mining - Indonesia
- Vedanta Resources Plc - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Star Paper Mills Limited - India
- Samtan Co., Ltd - South Korea
- Manunggal Multi Energi - Indonesia
- Vizag Seaport Private Limited - India
- Sarangani Energy Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- AsiaOL BioFuels Corp., Philippines
- Coastal Gujarat Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Bulk Trading Sa - Switzerland
- Coal and Oil Company - UAE
- Antam Resourcindo - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Ministry of Transport, Egypt
- Jaiprakash Power Ventures ltd
- SMC Global Power, Philippines
- Sinarmas Energy and Mining - Indonesia
- Interocean Group of Companies - India
- Bhoruka Overseas - Indonesia
- Semirara Mining Corp, Philippines
- Banpu Public Company Limited - Thailand
- Medco Energi Mining Internasional
- ASAPP Information Group - India
- Indian Oil Corporation Limited
- Thiess Contractors Indonesia
- Gujarat Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Renaissance Capital - South Africa
- Mintek Dendrill Indonesia
- Thai Mozambique Logistica
- TNB Fuel Sdn Bhd - Malaysia
- Formosa Plastics Group - Taiwan
- Orica Australia Pty. Ltd.
- Port Waratah Coal Services - Australia
- Price Waterhouse Coopers - Russia
- Independent Power Producers Association of India
- Parliament of New Zealand
- Ministry of Finance - Indonesia
- Globalindo Alam Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- Electricity Authority, New Zealand
- Metalloyd Limited - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- IEA Clean Coal Centre - UK
- Bukit Asam (Persero) Tbk - Indonesia
- Xindia Steels Limited - India
- CNBM International Corporation - China
- Bukit Baiduri Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Trasteel International SA, Italy
- Kumho Petrochemical, South Korea
- Posco Energy - South Korea
- Meenaskhi Energy Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Eastern Coal Council - USA
- The State Trading Corporation of India Ltd
- Wood Mackenzie - Singapore
- Bukit Makmur.PT - Indonesia
- Borneo Indobara - Indonesia
- Commonwealth Bank - Australia
- New Zealand Coal & Carbon
- Energy Development Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indogreen Group - Indonesia
- Intertek Mineral Services - Indonesia
- Straits Asia Resources Limited - Singapore
- GMR Energy Limited - India
- International Coal Ventures Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Toyota Tsusho Corporation, Japan
- Minerals Council of Australia
- ICICI Bank Limited - India
- Parry Sugars Refinery, India
- Georgia Ports Authority, United States
- Energy Link Ltd, New Zealand
- San Jose City I Power Corp, Philippines
- Attock Cement Pakistan Limited
- Electricity Generating Authority of Thailand
- Gujarat Mineral Development Corp Ltd - India
- Videocon Industries ltd - India
- Bhushan Steel Limited - India
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